Singapore’s economic growth might have dipped to ten-year lows, but the country remains a favorite spot for new businesses. Singapore is a major trading hub for both regional and international businesses. As such, there is a massive opportunity for entrepreneurs to set businesses in the country. This article discusses the business to start in Singapore as well as evaluate their expected returns.
Economic strengths of Singapore
The success of a new business depends on the amount of work and level of diligence that goes into the preparation stage. As part of the preparation stage, entrepreneurs usually evaluate the suitability of the location of their business. It would be in vain to discuss the best businesses to start anywhere without first considering the economic environment in which the business will operate. This section evaluates the economic strengths of Singapore, and why the region is ideal for new business.
For starters, Singapore is one of the most economically advanced countries in the South East Asia region. According to the World Bank, Singapore registered GDP of $54,530 USD per capita as of 2017. In terms of the World Bank’s ease of doing business score, Singapore scores 85.24 out of 100. That is not all. Singapore is a high-flier in terms of the global competitiveness of its economy. The World Economic Forum (WEF) ranks Singapore among the world’s most competitive economies.
In addition, the country is a high-income economy where many people have reasonable amounts of disposable income. Businesses in Singapore have access to high added value sectors, which include new technologies, chemicals, finance, and pharmaceuticals. Being a regional and international trading hub, Singapore is a favorite destination for a large quantity of FDI flows. The city-state facilitates this favorite-destination status with a tax regime that is advantageous to businesses. In addition, the political situation in Singapore is quite stable.
What to consider before starting a business in Singapore
Being a highly developed economy, starting a business in Singapore, can be a challenge sometimes due to tough regulations. Usually, developed economies demand strict adherence to their laws. As such, it is best if you find out everything you need to know before opening a business in such jurisdiction. Here are some issues you should consider before opening a business in Singapore.
- Which government bodies will you deal with?
For foreigners and locals alike, it is imperative to know the relevant government bodies that you will interact with along the business creation journey. For your benefit, here is a list of government bodies whose authorization you will need. First, the Accounting and Corporate Regulatory Authority (ACRA) regulates accounting issues related to business in Singapore. Secondly, the Ministry of Manpower (MOM) has the authority to allow foreigners to open and run businesses in Singapore. Other relevant government authorities and agencies include the Legal Services Regulatory Authority, Monetary Authority of Singapore, and the Inland Revenue Authority of Singapore.
- Relevant laws governing businesses in Singapore
Relevant laws cover taxation, employment, business registration, customs, and labor. For instance, you should consider the fact the law obligates employees to service their Central Provident Fund pension account monthly.
- Business structure
Singapore holds a lot of promise for new businesses. Nevertheless, does your business structure fit the demand and the supply chains? Experts warn that a poor business structure might not be able to support your business for a long time, especially if you operate in a highly competitive environment like Singapore. Therefore, you need to choose the best business structure before going live.
Best business to start in Singapore
Having gotten a good grasp of what it means opening a business in Singapore, let us discuss some of the best businesses to start.
- Artificial Intelligence and Digitization
In an effort to further the advancement of its economy, Singapore adopted the Smart Nation strategy in 2018. According to the strategy, Singapore intends to become an “economy powered by digital innovation” and the ability of the government to respond to changing needs. Essentially, Smart Nation is an effort by the government to ensure that businesses are more productive. The driving force for the strategy is the developments in digital technologies like artificial intelligence and digitization. Ultimately, Smart Nation is a deliberate effort to embrace digitalization in its totality.
Obviously, the Smart Nation ambition by Singapore presents huge business opportunities for entrepreneurs. Innovative people have the chance to open businesses focused on AI and digitization. The country has a robust ICT infrastructure to support such kind of businesses. According to Accenture research, AI “could create up to US$215 billion in gross value added (GVA) in Singapore by 2035.” Evidently, the demand for AI-focused businesses in the country should increase going forward.
With the kind of internet accessibility in Singapore, e-commerce seems like the most logical business to start. By the end of 2019, Singapore’s e-commerce revenue will clock approximately $4.99 billion USD. Further, the annual revenue is expected to grow at 14.7% CAGR between 2019 and 2023. Resultantly, the e-commerce scene in Singapore should have a market volume of up to $8.64 billion USD by 2023. In addition, e-commerce aligns with the city-state’s government strategy of digitizing the economy.
Singapore is increasingly aging. Since the early 2000s, Singapore’s average age has been growing steadily. According to Statista, the average age in Singapore in 2015 was 39.7 years. Interestingly, Statista estimates that the average age in the country will grow to 53.4 years in 2050. Further, many people in the country are rich, and their life expectancy is tending towards 90. This translates to a high demand for care services for the elderly.
Studies indicate that, largely, the senior care market in Asia-Pacific could hit 7.2% CAGR between 2018 and 2025. As such, eldercare is one of the fastest-growing industries in Singapore and the entire Asia-Pacific region.
Asia-Pacific, in general, and Singapore, in particular, is ripe for a wide range of businesses. Entrepreneurs are gearing up to leverage the opportunities that the region has to offer. However, entrepreneurs must clearly understand the key indicators and other factors like regulations before diving into the market.
(By Neha Gupta)